Tax returns to be filed at least 4 times a year for landlords and self-employed

In the Government’s Autumn Statement in November last year, it was announced that it was intended to dispense with the current system of annual self assessment. An ambitious digital transformation proposes a plan for individuals to file at least four tax returns a year. The proposals are planned to be in place by 2020 and it is thought that they will affect approximately four million taxpayers, principally the self employed, landlords and small business owners.

Although the proposals are at an early stage and no details have been published, the intention seems to be for quarterly returns to be submitted digitally with significant consequential cost savings at HMRC due to staff reductions. This may also involve quarterly payments of tax liabilities, with the Government implying that taxpayers will find this helpful to cash flow management as opposed to having to settle tax liabilities once or twice a year.

It is inevitable that many small businesses, professional bodies and individuals will be lobbying the Government over this issue with the additional administrative burden being placed on small businesses, which already have to deal with VAT reporting, new pensions administration and reporting in addition to existing reporting requirements for government and/or professional bodies. Concerns are also being voiced over other digital solutions that have either been poorly implemented or experienced significant cost overruns by HMRC in recent years.

It is early days but it is clearly the Government’s intention to transfer their costs and administrative burden to the taxpayer.